Interchange fees as a mechanism to raise rivals’ costs — some evidence from Switzerland

Summary

In 2004 the Swiss Competition Commission (ComCo) opened an investigation concerning multilateral agreed interchange fees in the Swiss credit card market which ended with an amicable settlement. The most important element of this amicable settlement consists in the limitation of the interchange fee to the actual network costs of the issuers. In this paper I discuss whether there was a market failure in the Swiss credit card market which justified the intervention by ComCo and whether the remedies imposed in the amicable settlement eliminated the alleged market failure.

JEL-Classification

L4G2

Keywords

antitrustpayment systemsinterchange feestwo-sided markets

Notes

All views contained in this text are solely those of the author and cannot be attributed to the Swiss Competition Commission or its Secretariat. The author would like to thank Martin Brown, Stefan Bühler and Sarah Rivière for helpful comments.